A look at the internals reveals a major surprise - while many said that the Q1 economy does not expose the true strength of the US consumer (instead of shopping in stores, they shopped online which wasn't captured or comparable), what actually happened was that Personal Consumption Expenditures as a % of GDP actually declined from 1.4% to 1.2% when netting out the harsh winter impact. As in the real economic driver was even weaker and this time you can't blame it on the weather!
The worst "economic expansion" in history was even worse than previously expected.
Why are governments suddenly so keen to ban physical cash? The answer appears to be that the banks and government authorities are anticipating bail-ins, steeply negative interest rates and hefty fees on cash, and they want to close any opening regular depositors might have to escape these forms of officially sanctioned theft. The escape mechanism from bail-ins and fees on cash deposits is physical cash, and hence the sudden flurry of calls to eliminate cash as a relic of a bygone age — that is, an age when commoners had some way to safeguard their money from bail-ins and bankers’ control.
Authorities pushing currency devaluation as a cure for their stagnating economies might want to study Frederic Bastiat's insight into the eventual cost and consequences: "For it almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa.”
"The Federal Reserve on Wednesday kept interest rates near zero but cited progress in the U.S. job market, a sign it remains on course to raise interest rates in September or later this year. At the same time, however, it flagged a nagging concern about low inflation, which is creating caution among officials and could convince them to delay the day of the first increase."
Did you know that the Federal Reserve pays an annual 6% dividend to its shareholders, i.e., the member banks of the cartel? Must be nice, considering savers who had nothing to do with cratering the world economy, and failed to receive a taxpayer funded bailout, can barely earn 0.5% on their money. It’s also quite bizarre. How many other “public institutions” have private shareholders to whom they pay 6% risk free dividends? None, which once again highlights the point that the Federal Reserve is NOT a public institution working on behalf of the citizenry, but is rather a banking cartel designed to enriched and protect its member banks (as we saw on clear display in 2008). It appears that some members of Congress are now targeting the estimated $17 billion per year paid out by the Fed to its member banks via the highway-funding bill.
Here is the paradox as succinctly summarized by Deutsche Bank, which notes that the current -29% year-over-year drop in the CRB index implies YoY headline CPI inflation falling from 0.1% to -0.9% over the next couple of months, or just in time for the September or December FOMC meetings both proposed as the "lift off" date. This would be the largest year-over-year drop since September 2009 (-1.3%) and one of the lowest prints in modern history.
There will always be some "crisis" or excuse to do nothing. But the fact remains that the U.S. economy is not at zero interest rate health. Monetary policy is broken with the status quo. Unlimited and constant central bank participation in the markets is ultimately destructive, encourages dangerous risk taking (just buy every dip, nothing can go wrong,) and has become too much of an aphrodisiac for policy makers. Savers are being told you are the patsies for share buybacks.
"Greece is playing it correctly. Agree to everything. Give Germany no excuse to do what they want. Get the money. This is why France, among others, want this all agreed as quickly as possible, because they know this deal is not how it will end, but an end that keeps the EUR together must be found. The Germans know it too. They also know that they have been had and it is their own fault."
Just as Japan thought they could go back to pre-Plaza Accord growth rates by holding on to the old ways in the 1990s, the Chinese will expect the growth miracle to return in 2016 with the “right” policies. It will not. It is all a mirage though. Just as in Japan, the Chinese will not allow the market process to do its magic to get the economy back on a stable footing. Draconian measures to stop the recent stock market rout are a clear testimony of that. In other words, the Chinese economy will resemble that of Japan, and it will do so very soon, if it is not already there. China is heading straight into a zero growth environment, and will be mired there for years to come.
The U.S. economy is growing at a painfully slow pace. Greece still threatens the euro. Chinese stocks have just pulled out of a frightening free-fall. Big companies in the U.S. are struggling to boost profits. You might think it's been a rough year for investors, but it's mostly been a smooth ride - and a profitable one. "Things have worked out," scoffs one analyst "and that has emboldened investors." Maybe too much...
China crashing, commodities plunging, emerging currencies imploding to levels last seen when LTCM blew up, Greece on the verge of deposit confiscations, the Apple Sachs Industrial average well in the red for the year, the US economy on the verge of an industrial recession, junk bonds bloodbathing, Donald Trump pulling ahead of Hillary... Meanwhile the president is in China's African slave colony of Ethiopia... prioritizing.
Durable Goods new orders has now fallen 5 months in a row (after revisions) flashing a orangey/red recession warning. After 2 weak months, Durable Goods bounced more than expected in June (+3.4% vs +3.2% exp) - though non-seasonally-adjusted dropped 3.1% MoM. There was an unexpected drop in Capital Goods Shipments non-defense Ex-Air which fell 0.1% (against expectations of a 0.6% rise), but mosty worrying is that Core CapEx collapsed 6.6% YoY - the second biggest decline since Lehman.
We’ve seen some significant swings in precious metals over the last several years and if we are to believe the paper spot prices and recent value of mining shares, one would think that gold and silver are on their last leg. Last weekend precious metals took a massive hit to the downside, sending shock waves throughout the industry. But was the move really representative of what’s happening in precious metals markets around the world? Or, is there an effort by large financial institutions to keep prices suppressed? In an open letter to the Commodity Futures Trading Commission First Mining Finance CEO Keith Neumeyer argues that real producers and consumers don’t appear to be represented by the purported billion dollar moves on paper trading exchanges. With China recently revealing that they have added some 600 tons of gold to their stockpiles and the U.S. mint having suspended sales of Silver Eagles due to extremely high demand in early July, how is it possible that prices are crashing?
"If the dollar rallies again from here then it is game over and the exit doors are small..."